Macroeconomic Forecasts Remain Positive

January 5, 2015

The 50 economic forecasting groups polled monthly by Blue Chip Economic Indicators cut their forecast for real growth of 2014 gross domestic product in the U.S. to 2.4% in the May survey, but remain upbeat about the rest of this year and next. The cut comes as the paltry 0.1% GDP growth of the first quarter surprised nearly everyone.

But as Randall Moore, Blue Chip’s executive editor wrote the May newsletter, “The consensus believes the Q1 shortfall was the result of temporary factors. As a result, it continues to forecast that real GDP growth will snap back markedly in the current quarter and maintain a healthy above-trend pace through the end of 2015.” The group predicts real GDP growth will rebound to 3.4% in Q2 and remain at 3% or above through next year. The economists continue to forecast 3% real GDP growth for 2015.

The forecasts for growth of real disposable income and personal consumption spending remain moderately positive. The 2014 forecast for real DPI was down 0.1 point to 2.2% but remained at 2.9% for ’15. The forecast for real PCE for ’14 rose perversely to 2.8% as economists noted consumers spent more for home heating and healthcare as the Affordable Care Act kicked in. The forecast for real PCE growth next year also remained at 2.9%.

Most of the Blue Chip consensus international forecasts for real GDP growth either stayed steady or improved slightly in the May forecasts. One notable exception was the forecast for GDP growth in Russia, which fell to 0.6% for ’14 from 1% in the April forecast.